Why Entrepreneurs Make More Money Than Engineers (And Deserve It)

Majoring in engineering is harder than majoring in whatever it is that entrepreneurs study, and yet entrepreneurs make more money than engineers.

Why?

Because entrepreneurship is more highly leveraged.

Why?

Because, as Fred Wilson says, "It takes chutzpah to make it as an entrepreneur and the cereal guys can hire the CS grads from MIT easier than the CS grads can get up the courage to sell 800 boxes of cereal at $40/box." Entrepreneurship is all about sales and networking, which is something fewer people can do than engineering.

Why?

Because if you want to be an engineer, there's a step-by-step process that you can follow. It may be really hard, but if you follow all the steps then you're pretty much guaranteed to succeed. At the end of the day there are more people willing to follow this step-by-step process, no matter how hard and stupid it might be, than there are people willing to pick up the phone and call someone who might reject them.

Anyone can do hard, and when anyone can do something then by definition it isn't leveraged. A hundred years ago doing hard work was considered a virtue. Now it's a sign that you're avoiding work that's difficult.

Comments

[Prashant]

Some of the best entrepreneurs I have met have also been engineers!!!! So let's not start thinking that it is mutually exclusive. In fact, many of today's tech startups are run by engineers, and run rather successfully!

[Jan]

If you create wealth for society by inventing (and owning) something people want, you create wealth for yourself.
As an entrepreneur you have two advantages: measurement and leverage. You are in a position where your performance can be
measured, or there is no way to get paid more by doing more. And you have leverage, in the sense that the decisions you make have a big effect.
Startups allow measurement because they're small, and they offer leverage because they make money by inventing new technology. What is technology? It's technique, a way we all do things.
And when you discover a new way to do things, its value is multiplied by all the people who use it. That's the difference between a startup and a restaurant. You serve coffee one customer at a time. Whereas if you solve a technical problem that a lot of people care about, you help everyone who uses your solution. That's leverage. Paul Graham thinks of startups as business systems. If you follow his advice, go out there and become rich by creating software, the next big web application or other technology that is easy to distribute and that everybody will want use. Oh, and you will need an engineer to build it and a guy with chuzpe to market it. I think to be an entrepreneur you have to be willing and able to pursue your own path and you have to love what you do. A freelancer (time for money) doesn't have much leverage, but does this make him a lesser entrepreneur?

[Alex Krupp]

You're right guys, I fixed the title.

[Shan Swaleh]

I agree with your post that ENTREPRENURS should make more then engineers (at least the succesful ones, and that's how the world actually works).

But your TITLE is completely wrong, middle managers main tasks are to delegate, make scheduling, attend meetings and make Gantt charts. This is not challenging work at all.

I would say that middle managers are still a necessary evil since you need a carrot to dangle in front of the employees so they will work hard and "aspire" to become middle managers.

[Tom Smykowski]

Bob Slydell: What would ya say, ya do here?

Tom Smykowski: Well-well look. I already told you: I deal with the goddamn customers so the engineers don't have to. I have people skills; I am good at dealing with people. Can't you understand that? What the hell is wrong with you people?

Office Space.

[Not an engineer.]

Being good at any profession is difficult. It's not as though any and every engineer has the same skill set simply because they've all taken roughly the same courses in school. There are skilled engineers, there are technically proficient engineers, and there are people with engineering degrees and not much else.

The same is true of middle managers. I'd hardly agree that every middle manager is a skilled entrepreneur worthy of a huge paycheque. In fact, most middle managers I've met have no idea how to do their jobs and seem to survive primarily by passing the buck. In most cases you could trim away a lot of the middle management and the company would actually function more smoothly.

In any case, there's no cause for a blanket claim that all engineers deserve less money simply because they're not in it for the money. A good employee should be valued (and compensated accordingly, in an ideal world) for their contribution to the company.

[Not an engineer.]

Being good at any profession is difficult. It's not as though any and every engineer has the same skill set simply because they've all taken roughly the same courses in school. There are skilled engineers, there are technically proficient engineers, and there are people with engineering degrees and not much else.
The same is true of middle managers. I'd hardly agree that every middle manager is a skilled entrepreneur worthy of a huge paycheque. In fact, most middle managers I've met have no idea how to do their jobs and seem to survive primarily by passing the buck. In most cases you could trim away a lot of the middle management and the company would actually function more smoothly.
In any case, there's no cause for a blanket claim that all engineers deserve less money simply because some middle managers earn theirs. A good employee should be valued (and compensated accordingly, in an ideal world) for their contribution to the company.

[Dereck Curry]

From my personal experience, engineers are rarely in their profession for the money. Those who are in it for the money, usually burn out or move on to MBA school and claw their way the management ladder.

Real engineers love building things. They love breaking things. They like complex problems. They find solutions. They thrive in the environments that challenge their mind and their skills. In short, engineers love engineering.

And entrepreneurs love their profession too. Or at least they should. If an entrepreneur is just in it for the money, then they are just as sad as those engineers that are just in it for the money. They too will burn out or move on.

Engineers are not some natural antithesis to the entrepreneur. In truth, they are very much alike. The true engineers and the true entrepreneurs both want their products to be useful. They want their products to fill some niche or solve some problem. Both had better be realists too. Neither wants to fail.

Engineers and entrepreneurs just have a different set of skills. What one profession finds difficult and would rather not do, the other finds ease and enjoyment. But both the engineer and the entrepreneur are absolutely needed.

In the end, it's not about who makes more money. Entrepreneurs can make more money, as that won't bother most engineers. It's about doing what you love. And you don't do that for the money. You'd pay money to do that.

[Dylan]

Engineering is not a step by step process any more than painting is.